Core Insights - Civitas Resources, Inc. (NYSE:CIVI) is recognized as one of the 9 hot energy stocks to buy, with UBS maintaining a Neutral rating and a price target of $27 following the third-quarter 2025 earnings report [1][2] Production and Financial Performance - The company reported a 6% increase in overall output, averaging approximately 336,000 barrels of oil equivalent per day (mboepd) during the quarter [1] - Oil volumes rose to 158 thousand barrels per day, while cash operating costs decreased by 5% to $9.67 per barrel of oil equivalent [1] - Adjusted earnings per share for the third quarter were $1.93, significantly exceeding the consensus forecast of $1.34 [2] - Revenue for the quarter was $1.17 billion, slightly below analyst expectations of $1.20 billion [2] Operational Improvements - UBS noted that Civitas Resources demonstrated "continued operational improvements" during the quarter, which are expected to benefit the company moving forward [2]

Core Viewpoint - The merger between Civitas Resources, Inc. (CIVI) and SM Energy Company (SM) has raised concerns among shareholders regarding its potential impact on long-term investment value [1]. Company Analysis - Civitas Resources, Inc. is involved in the energy sector, specifically focusing on oil and gas production [1]. - The company has a beneficial long position in its shares, indicating confidence in its long-term performance despite merger concerns [2]. Industry Context - The energy industry is currently experiencing significant consolidation, with mergers and acquisitions being a common strategy for growth and market positioning [1].

Core Viewpoint - SM Energy and Civitas Resources are moving forward with a planned merger aimed at creating significant shareholder value through synergies and strategic divestitures [1][17]. Management and Board Structure - The leadership team post-transaction will include experienced executives such as Beth McDonald as CEO and Wade Pursell as CFO [2]. - The Board of Directors will consist of 11 members, with six from SM Energy and five from Civitas, led by Non-Executive Chairman Julio Quintana [2]. Financial Strategy and Synergies - The companies aim to achieve at least $1 billion in divestitures within the first year after the merger to strengthen the balance sheet and enhance shareholder returns [2]. - Expected annual synergies are projected to be $200 million, with potential upside to $300 million, translating to a net present value (NPV-10) of $1.0 billion to $1.5 billion, representing 22% to 32% of the pro-forma market cap [2][3]. - Specific synergies include: - Drilling and completion savings of $100–$150 million [2]. - General and administrative (G&A) savings of $70–$95 million [3]. - Cost of capital savings of $30–$55 million [3]. Market Response - S&P Global Ratings and Fitch Ratings have placed SM Energy on CreditWatch Positive and Rating Watch Positive, indicating strong confidence in the post-merger outlook and improved credit profile [3].

Core Insights - Civitas Resources, Inc. (CIVI) reported third-quarter 2025 adjusted earnings per share of $1.93, exceeding the Zacks Consensus Estimate of $1.34, driven by higher natural gas price realizations, although down from $1.99 in the previous year due to lower oil price realizations [1][10] - The company’s revenues of $1.2 billion fell 8.2% from $1.3 billion year-over-year and missed the Zacks Consensus Estimate by $13 million, primarily due to a decline in oil and natural gas sales volume [2][10] - Civitas and SM Energy announced a merger agreement involving an all-stock deal, with a combined company valuation of approximately $12.8 billion, expected to generate over $1.4 billion in free cash flow in 2025 [3][10] Financial Performance - The average third-quarter sales volume decreased by 3.5% year-over-year to 336 thousand barrels of oil equivalent per day (Mboe/d), surpassing the Zacks Consensus Estimate of 332.2 Mboe/d [5] - Oil volume for the period was 158 thousand barrels per day (MBbls/d), slightly down from 159 MBbls/d in the prior year, while natural gas production was 546 thousand cubic feet per day [5] - The average sales price for oil was $65.24 per barrel, down 13.3% from $75 in the prior year, while the average realized natural gas price increased to $1.29 per thousand cubic feet from $0.17 [6] Costs and Expenses - Total operating expenses decreased to $895 million from $926 million year-over-year, attributed to lower taxes, depreciation, and other expenses, despite a 7.5% increase in lease operating expenses to $159 million [7] - The unit cash operating cost was reported at $9.67 per BOE [7] Financial Position - Cash flow from operations totaled $860 million, with capital expenditures of $491 million, resulting in adjusted free cash flow of $254 million [8] - Civitas approved a quarterly dividend of 50 cents per share, with a long-term debt of $5.1 billion and a debt-to-capitalization ratio of 43.5% as of September 30 [8]

Core Viewpoint - Civitas Resources reported quarterly earnings of $1.93 per share, exceeding the Zacks Consensus Estimate of $1.34 per share, but down from $1.99 per share a year ago, indicating an earnings surprise of +44.03% [1][2] Financial Performance - The company posted revenues of $1.17 billion for the quarter ended September 2025, missing the Zacks Consensus Estimate by 1.09% and down from $1.27 billion year-over-year [2] - Over the last four quarters, Civitas has surpassed consensus EPS estimates two times, but has not beaten consensus revenue estimates [2] Stock Performance - Civitas shares have declined approximately 43.7% since the beginning of the year, contrasting with the S&P 500's gain of 15.6% [3] - The current Zacks Rank for Civitas is 4 (Sell), indicating expected underperformance in the near future [6] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $1.35 on revenues of $1.14 billion, and for the current fiscal year, it is $5.44 on revenues of $4.62 billion [7] - The trend of estimate revisions for Civitas was unfavorable prior to the earnings release, which may impact future stock movements [5][6] Industry Context - The Oil and Gas - Exploration and Production - United States industry is currently in the bottom 21% of over 250 Zacks industries, suggesting a challenging environment for stocks in this sector [8]

Financial Performance - Net income for the three months ended September 30, 2025, was $177 million, or $1.99 per diluted share, with adjusted EBITDAX of $855 million[123]. - Cash flows provided by operating activities for the three months ended September 30, 2025, were $860 million, and adjusted free cash flow was $254 million[123]. - Crude oil sales revenue for the three months ended September 30, 2025, was $950 million, a 9% increase from $868 million in the previous quarter[137]. - Natural gas sales revenue for the three months ended September 30, 2025, was $65 million, a 35% increase from $48 million in the previous quarter[137]. - Total product revenue for the three months ended September 30, 2025, was $1.16 billion, a 10% increase from $1.05 billion in the previous quarter[137]. - Product revenues increased 10% to $1.2 billion for the three months ended September 30, 2025, compared to $1.1 billion for the three months ended June 30, 2025, driven by a 7% increase in total sales volumes and a 3% increase in total product pricing per Boe[141]. - Net income for the three months ended September 30, 2025, was $177 million, compared to $124 million for the previous quarter and $688 million for the nine months ended September 30, 2024[176]. - Adjusted EBITDAX for the three months ended September 30, 2025, was $855 million, an increase from $749 million in the previous quarter and $2,389 million for the nine months ended September 30, 2024[176]. - Net cash provided by operating activities for the three months ended September 30, 2025, was $860 million, compared to $298 million for the previous quarter and $1,877 million for the nine months ended September 30, 2024[179]. - Adjusted Free Cash Flow for the three months ended September 30, 2025, was $254 million, up from $123 million in the previous quarter and $548 million for the nine months ended September 30, 2024[179]. Sales and Production - Total sales volumes for the three months ended September 30, 2025, were 31 MMBoe, with average sales volumes of 336 MBoe per day[123]. - Average crude oil sales price after derivatives for the three months ended September 30, 2025, was $67.87 per Bbl, compared to $66.55 in the previous quarter and $76.16 for the same period in 2024[181]. - Average natural gas sales price after derivatives for the three months ended September 30, 2025, was $1.81 per Mcf, compared to $1.69 in the previous quarter and $0.86 for the same period in 2024[181]. - The company drilled, completed, and turned to sales 78, 94, and 115 net operated wells in the Permian Basin during the nine months ended September 30, 2025[172]. Expenses and Costs - Total operating expenses increased 1% to $895 million for the three months ended September 30, 2025, and decreased 3% to $2.661 billion for the nine months ended September 30, 2025, compared to the same periods in 2024[143]. - Lease operating expense increased 21% to $491 million for the nine months ended September 30, 2025, compared to $405 million for the same period in 2024, with the Permian Basin accounting for approximately 60% of the increase[144]. - Gathering, transportation, and processing expense increased 6% to $88 million for the three months ended September 30, 2025, but decreased 8% to $258 million for the nine months ended September 30, 2025, compared to the same period in 2024[146]. - Severance and ad valorem taxes increased 8% to $81 million for the three months ended September 30, 2025, but decreased 16% to $245 million for the nine months ended September 30, 2025, compared to the same period in 2024[149]. - Depreciation, depletion, and amortization expense decreased 1% to $497 million for the three months ended September 30, 2025, and decreased 5% to $1.4 billion for the nine months ended September 30, 2025, compared to the same periods in 2024[150][151]. - General and administrative expense decreased 2% to $52 million for the three months ended September 30, 2025, and decreased 7% to $162 million for the nine months ended September 30, 2025, compared to the same periods in 2024[152][153]. Capital Expenditures and Investments - Capital expenditures for the three months ended September 30, 2025, totaled $491 million[123]. - Capital expenditures for drilling and completion activities decreased by $200 million year over year, reflecting a 5% reduction in the 2025 capital investment program compared to 2024[172]. Debt and Liquidity - As of September 30, 2025, liquidity was $2.2 billion, consisting of $56 million in cash and $2.1 billion in available borrowing capacity on the Credit Facility[163]. - Total sources of cash and cash equivalents for the nine months ended September 30, 2025, were $4.909 billion, an increase from $3.822 billion in the same period of 2024[168]. - Total uses of cash and cash equivalents for the nine months ended September 30, 2025, were $4.929 billion, compared to $4.902 billion in the same period of 2024[168]. - Interest expense for the three months ended September 30, 2025, was $120 million, compared to $114 million for the three months ended June 30, 2025, with average debt outstanding of $5.5 billion and $5.4 billion, respectively[157]. - For the nine months ended September 30, 2025, interest expense was $341 million, slightly down from $342 million in the same period of 2024, with average debt outstanding increasing from $4.8 billion to $5.4 billion[158]. - As of September 30, 2025, the company had $350 million outstanding under its Credit Facility, with compliance to all financial covenants[186]. Market and Risk Factors - The company is exposed to counterparty credit risk associated with its derivative activities, with contracts executed with 16 counterparties, all having investment grade credit ratings[187]. - The marketability of the company's production is influenced by the availability and capacity of third-party refineries and pipeline infrastructure, which could affect pricing and production plans[190].

Financial Performance - Third quarter 2025 net income was $177 million, with adjusted net income of $172 million, reflecting strong financial performance [3]. - Total operating net revenues for Q3 2025 were $1,168 million, a decrease of 8.2% from $1,272 million in Q3 2024 [17]. - Net income for Q3 2025 was $177 million, down 40.3% compared to $296 million in Q3 2024 [17]. - Earnings per share (EPS) for Q3 2025 were $1.99, a decline from $3.02 in Q3 2024 [17]. - Adjusted Net Income for Q3 2025 was $172 million, up from $92 million in Q2 2025, with Adjusted Net Income per diluted share increasing to $1.93 from $0.99 [24]. - Adjusted EBITDAX for Q3 2025 was $855 million, compared to $749 million in Q2 2025, reflecting strong operational performance [26]. Cash Flow and Liquidity - Operating cash flow for the third quarter reached $860 million, while adjusted EBITDAX was $855 million [3]. - Cash flows from operating activities for the nine months ended September 30, 2025, totaled $1,877 million, compared to $2,007 million for the same period in 2024, reflecting a decrease of 6.5% [18]. - Financial liquidity at the end of the third quarter was $2.2 billion, including cash on hand and available borrowings [10]. - Net cash provided by operating activities for Q3 2025 was $860 million, compared to $298 million in Q2 2025, and $1,877 million for the nine months ended September 30, 2025, down from $2,007 million in the same period of 2024 [28]. - Adjusted Free Cash Flow for Q3 2025 was $254 million, an increase from $123 million in Q2 2025, and $548 million for the nine months ended September 30, 2025, compared to $747 million in the same period of 2024 [28]. Capital Expenditures and Investments - Capital expenditures totaled $491 million, reflecting ongoing drilling and completion efficiencies [10]. - Capital expenditures for drilling and completion activities were $471 million in Q3 2025, compared to $541 million in Q3 2024 [18]. - Capital expenditures for Q3 2025 totaled $491 million, with $249 million in the Permian Basin and $238 million in the DJ Basin [28]. Debt and Equity - The company reduced net debt by $237 million and repurchased $250 million of its stock, representing approximately 8% of outstanding shares [5]. - Total debt as of September 30, 2025, was $5,200 million, a decrease from $5,450 million as of June 30, 2025 [32]. - Net debt as of September 30, 2025, was $5,144 million, compared to $5,381 million as of June 30, 2025, and $4,949 million as of December 31, 2024 [32]. - Total stockholders' equity increased to $6,685 million as of September 30, 2025, from $6,629 million at the end of 2024 [19]. Sales and Production - Sales volumes increased to 336 MBoe/d, with oil volumes at 158 MBbl/d, both up 6% from the previous quarter [5]. - Average sales volumes for crude oil in the Permian Basin increased to 86 MBbl/d in Q3 2025 from 83 MBbl/d in Q2 2025, while total average sales volumes reached 336 MBoe/d [21]. - Total average sales volumes for natural gas reached 546 MMcf/d in Q3 2025, up from 524 MMcf/d in Q2 2025 [21]. Dividends and Shareholder Returns - A quarterly dividend of $0.50 per share was declared, payable on December 29, 2025 [8]. - The company repurchased and retired $250 million of common stock in Q3 2025, compared to $78 million in Q3 2024 [18]. Risk Management and Guidance - Due to the pending merger with SM Energy, the company has discontinued providing future financial guidance [9]. - The company added over 2 million barrels of oil hedges covering the next 12 months during the third quarter [10]. - The derivative cash settlement gain for crude oil was $39 million in Q3 2025, up from $36 million in Q2 2025, indicating effective price risk management [21].

Core Insights - Civitas Resources reported strong financial results for the third quarter of 2025, with net income of $177 million and operating cash flow of $860 million, driven by increased production and reduced cash operating expenses [3][4][6]. Financial Performance - Net income for the third quarter was $177 million, compared to $296 million in the same quarter of the previous year [3][18]. - Adjusted net income was $172 million for the quarter, reflecting a significant increase from $92 million in the previous quarter [24][27]. - Operating cash flow reached $860 million, up from $835 million in the previous year [19]. - Adjusted EBITDAX for the quarter was $855 million, compared to $2,389 million year-to-date [3][4]. - Sales volumes increased to 336 MBoe/d, with oil volumes rising to 158 MBbl/d, marking a 6% increase from the second quarter [4][8]. Operational Highlights - The company successfully reduced net debt by $237 million and repurchased $250 million of its stock, representing approximately 8% of outstanding shares [4][8]. - Capital expenditures totaled $491 million, reflecting ongoing drilling and completion efficiencies [4][8]. - The company declared a quarterly dividend of $0.50 per share, payable on December 29, 2025 [9]. Production and Sales - Production from the Permian Basin increased by 6% to 181 MBoe/d, with oil volumes growing to 86 MBbl/d [8][22]. - The DJ Basin also saw a 6% increase in production to 155 MBoe/d, with oil volumes rising to 72 MBbl/d [8][22]. - Crude oil, natural gas, and NGL revenues totaled $1.2 billion, benefiting from strong volumes and realizations [8][18]. Market Position and Strategy - Civitas Resources focuses on maximizing shareholder returns through significant free cash flow generation, maintaining a strong balance sheet, and returning capital to shareholders [11]. - The company has discontinued providing quarterly and annual guidance due to the pending merger with SM Energy [10].

Core Insights - Class Action Attorney Juan Monteverde's firm, Monteverde & Associates PC, is investigating Civitas Resources, Inc. regarding its proposed sale to SM Energy Company, where Civitas shareholders will receive 1.45 shares of SM Energy common stock for each share of Civitas [1] Group 1: Company Overview - Monteverde & Associates PC is recognized as a Top 50 Firm in the 2024 ISS Securities Class Action Services Report and has recovered millions for shareholders [1] - The firm is located in the Empire State Building, New York City, and specializes in class action securities litigation [2] Group 2: Legal Proceedings - The firm is currently investigating the fairness of the proposed transaction between Civitas Resources and SM Energy [1] - Civitas shareholders are encouraged to seek additional information regarding their rights and the ongoing investigation [3]

Core Insights - Civitas Resources, Inc. (CIVI) is expected to report third-quarter 2025 results on November 6, with earnings estimated at $1.36 per share and revenues projected at $1.2 billion [1][9] Group 1: Previous Performance - In the last reported quarter, Civitas Resources missed the consensus earnings estimate, reporting adjusted earnings per share of 99 cents compared to the expected $1.12, and revenues of $1.1 billion, which was 5.2% below the consensus [2] - Over the last four quarters, CIVI has beaten the Zacks Consensus Estimate twice and missed twice, resulting in an average negative surprise of 2% [3] Group 2: Q3 2025 Expectations - The Zacks Consensus Estimate indicates a 31.7% year-over-year decline in earnings for the third quarter, with revenues expected to decrease by 6.9% from the previous year's $1.3 billion [3][5] - The company's production volumes are anticipated to have decreased due to the sale of DJ Basin assets, continuing the trend of year-over-year declines in earnings per share [4][5] Group 3: Cost Management Initiatives - Civitas Resources is targeting $40 million in cost savings for 2025 and $100 million for 2026, driven by efficiency initiatives and improved oil differentials from new transportation agreements [6][9] Group 4: Earnings Prediction Model - The proven Zacks model does not predict an earnings beat for Civitas Resources this time, as the Earnings ESP is -1.84% and the company holds a Zacks Rank of 4 (Sell) [7][8]